In addition to offering a plan to close 2011’s $700 million budget deficit, Republican Gov. M. Jodi Rell is expected to offer legislative leaders on Monday an alternative to a plan that would continue a tax on consumers’ electricity bills.

In a letter to legislative leaders Thursday, Rell said she is continuing to discuss options for securitization, which is the practice of borrowing against an established or new revenue stream.

Last week, Rell’s office said she would veto the Finance Committee’s approval of a proposal which would ask consumers to continue paying more for electricity, rather than allowing a state-mandated charge to cover the cost of deregulation to sunset.

“Other options must be looked at and agreement between both sides of the aisle and the governor must be reached,” Rell’s office said in an emailed statement.

Based on a report submitted to the legislature on Feb. 3, Rell’s options are fairly limited and each comes with its own set of problems.

The second option on the securitization report authored by the Office of Policy and Management and the Office of the State Treasurer, is Keno – the lottery-based game played in bars, restaurants, and convenience stores.

The first problem with Keno is that it is not yet legal to play outside the Indian gaming casinos in the state. The second problem is the possibility that legalizing Keno may violate the state’s revenue sharing agreement with the two tribes. And lastly, there are the voters, who according to the last Quinnipiac University poll oppose the legalization of Keno by a 70 to 27 percent margin.

Sen. Andrea Stillman, D-Waterford, has said the state could be putting the Indian gaming agreements at risk for “a silly Keno game.” The state’s deal with the tribes already generates $400 million annually.

“I’m still highly opposed,” Stillman said in early April when it looked like the Finance Committee was leaning toward securitizing Keno instead of the electricity charges.

Also mentioned among the six revenue options for possible securitization outlined in the Feb. 3 report were highway tolls, tobacco settlement funds, and other general fund revenue such as income tax, sales tax, and the casino revenue.

“These options were not reviewed in depth given the likely impact on future structural imbalances and cash flows, as well as the likely negative impact on the state’s credit rating,” the report states.

In a January draft of the report, the only listed options were using the charges on ratepayers electric bills, raiding some of the Clean Energy and Energy Efficiency funds, and Keno.

But a Jan. 30 email obtained through a Freedom of Information Act request, Budget Director Robert Genuario clearly told Lisa Moody, Rell’s chief of staff, that they were working “to clarify it as a list of options as opposed to a specific recommendation.” This statement appears to have been a warning not to appear publicly as though they recommended anything at all, but rather simply came up with a list of possibilities.

The Finance Committee largely followed the recommendations presented in the Feb. 3 report by choosing to continue the charge on consumers’ electricity bills and ignoring the option to raid the Clean Energy and Energy Efficiency funds, which they were told were helping to create jobs.

Rell’s veto threat infuriated Democratic lawmakers who complained last week that her reversal was “disingenuous.”

“Frankly, we think it’s insulting to all the members of the Finance Committee who voted to approve her plan for securitization,“ Rep. Cameron Staples, co-chairman of the Finance Committee, said last week. He said Democratic leaders don’t like the concept of securitization either, but it was a means to an end in reaching a budget deal with Rell last year.

Rell doesn’t disagree that it was a means to an end.

“No one really wanted to pursue securitization, but there was no choice because agreement could not be reached on the spending cuts needed to avoid securitization,“ Rell’s office said.

If Rell and the legislature fail to securitize $1.3 billion, they will have to agree to a package of spending cuts or tax increases to close the 2011 budget gap. That’s $1.3 billion they will need to find in addition to the $700 million deficit already projected for 2011.